Banking royal commission: CBA sought deal with ASIC over super breaches

CBA’s Matt Comyn lobbied ASIC to accept a media release rather than impose an enforceable undertaking for super breaches.

Commonwealth CEO Matt Comyn, who was head of the bank’s retail division when the call was made. Pic: AAP

Commonwealth Bank chief executive Matt Comyn lobbied Australian Securities and Investments Commission deputy chairman Peter Kell to overrule the corporate regulator’s head of enforcement, who wanted to slap an enforceable undertaking on the bank over mis-sold super products, the financial services royal commission has heard.

In October last year, Mr Comyn, who was then the head of the retail division of CBA, called Mr Kell to try to get the watchdog to drop its threat of an enforceable undertaking in return for the bank putting out a media release instead.

CBA recently agreed to the enforceable undertaking (EU) after ASIC found it was shunting customers into its own superannuation products under the impression they were receiving personal financial advice, which it was not permitted to give.

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The royal commission heard today that Larissa Shafir, CBA’s head of compliance, had warned senior bank executives that ASIC was “unlikely” to resolve the matter without an EU.

Senior ASIC executive Tim Mullaly, who heads the regulator’s powerful enforcement division, had previously written to CBA proposing an EU.

The royal commission heard that in August Ms Shafir proposed four steps to try and make sure the bank could keep selling its super products through its branches without having to provide personal advice through its so-called “Project Everest”.

“Rather than moving forward with (the enforceable undertaking), what’s being suggested is Mr Comyn will call up Mr Kell to see whether maybe you can still get a deal done on the basis of a media release rather than an EU?” counsel assisting Michael Hodge, QC, asked Colonial First State executive Linda Elkins.

Ms Elkins said that was not a proper reflection of the events.

But a subsequent email showed Mr Comyn responding to the email chain, in which he said he had “left a voicemail for Peter Kell” and that he would “revert with (a) response”.

Mr Hodge asked an open question: “Can we assume Mr Kell didn’t go with the idea of a media release?”

The royal commission heard CBA’s attempts to avoid the enforceable undertaking did not end there, and that discussions about banks’ dealings with the corporate regulator were taking place at the lobby group for the wealth management industry, the Financial Services Council.

In early October, Ms Shafir emailed Ms Elkins asking if she had “any further intel on ANZ”.

ANZ was also the subject of a similar ASIC action over the selling of its superannuation products, as was Westpac.

“Was there some communication happening between ANZ and CBA as to what positions they were each respectively taking with ASIC?” Mr Hodge asked.

Ms Elkins said CBA and ANZ “were both aware that we were negotiating enforceable undertakings”.

“There was discussions — at the FSC might be a place where everyone was talking about the problem to do with general advice and personal advice and going to court,” Ms Elkins told the hearing commission.

Colonial First State executive Linda Elkins. Pic: AAP

Another email showed Colonial First state head of legal Lisa Rava knew specific details of ANZ’s bargaining with ASIC.

“How was it that Ms Rava knew that ANZ were willing to accept the enforceable undertaking but only on a particular basis?” Mr Hodge asked.

Emails at the end of October 2017 from Ms Shafir to Mr Comyn, tabled at the royal commission, showed she had raised with Mr Mullaly “the view that ASIC should wait until the Westpac proceedings are determined before taking our matter further”.

“It was clear that this was not going to be acceptable. I don’t think there is any great need for you to meet with Kell this Friday unless you would like to have a further go at pursuing this,” Ms Shafir told Mr Comyn.

Mr Comyn wrote back: “I think we should keep trying. I don’t think I will achieve much but don’t think I’ve got much to lose either.”

Ms Shafir then suggested: “Perhaps a conversation with the new commissioner who may have a different perspective”.